Southern Africa ranks as the leading region for both sourcing imports and serving as the primary export destination across the continent, according to the latest Standard Bank Africa Trade Barometer (SB ATB).
The barometer shows 30% of surveyed businesses source imports from Southern Africa, a figure consistent with the 31% recorded in May 2023. This trend is largely driven by Southern African Development Community (Sadc) member countries, including SA, Angola, Mozambique, Namibia, and Zambia. However, SA businesses indicate the lowest levels of imports from the Southern African region.
“A majority of businesses in Mozambique (44%) and Namibia (52%) source their imports from SA, likely due to the ease of trade with the neighbouring country and fellow Sadc member. Imports from other regions within Africa are relatively low, particularly from Central and North Africa. Only 3% of surveyed businesses import from Central and North Africa,” reads the barometer.
Similarly, SA emerged as the top export market for surveyed businesses, with 8% exporting goods there, though this figure is only slightly higher than others, down from 14% in the May 2023 cohort.
“The Democratic Republic of Congo (DRC) is a close second export destination; 7% of surveyed businesses export to the DRC, a 2% increase from the export activities of the previous year’s cohort,” reads the barometer.
The SB ATB trade attractiveness rankings reveal significant changes among the 10 African nations, with Tanzania rising from eighth to fourth, Mozambique from fourth to third, Nigeria from sixth to fifth, and Zambia from ninth to eighth. In contrast, Ghana dropped from third to seventh, Uganda fell from seventh to ninth, and Kenya slipped from fifth to sixth. Meanwhile, SA, Namibia and Angola retained their positions at first, second and 10th, respectively.
“Tanzania is now ranked fourth highest in terms of overall attractiveness for trade in Africa. Its leap in the rankings was boosted by the country’s substantial investments in infrastructure and better access to finance, enabling businesses to engage more actively in cross-border trade.”
Most surveyed businesses remain optimistic about the economy and the business environment across the 10 markets. However, high taxation (76%) remains a major concern. As governments seek to expand their tax bases and manage debts, the business community has resisted tax reforms that lead to increased operating costs.
“This has been witnessed in markets such as Kenya, where youth-led public protests erupted over proposed tax hikes; in Nigeria, where there were protests against the removal of fuel subsidies; and in Tanzania, where traders led protests in response to new tax measures which required the mandatory use of electronic fiscal devices for issuing receipts and the requirement for electronic tax tamps on transactions,” reads the barometer.
Meanwhile, 76% of surveyed businesses reported limited foreign currency liquidity in their markets as a barrier to cross-border trade, with the highest rates seen in Ghana (83%) and Zambia (82%), highlighting the urgent need for government support.
Biggest challenge
Power supply infrastructure poses the biggest challenge for businesses in the 10 African markets, with Nigerian companies particularly affected by a national grid that often collapses and struggles to meet daily peak demand, which is almost four times its generation capacity.
The trade barometer also highlights that Africa continues to face challenges with inadequate infrastructure, particularly in rail systems, which remain underdeveloped yet hold potential to boost domestic and cross-border trade. Improvements in the continent’s road, rail and power infrastructure are crucial for fully realising the benefits of the African Continental Free Trade Area.
In Ghana, the quality of rail infrastructure is considered low. However, a number of rail projects expected to be completed in 2024 aim to address this issue. Meanwhile, SA’s port and rail infrastructure is struggling with operational efficiency due to equipment shortages and maintenance delays affecting the government-owned rail and port operator.
“This has had a major impact on the economy with estimates suggesting that Transnet’s port and rail inefficiencies cost SA’s economy about $57m a day. Transnet recently received a $279m loan from the New Development Bank, a multilateral development bank established by Brics member states, to upgrade its infrastructure and a $1bn loan from the African Development Bank to fund its $8bn recovery plan.”
China is a key trade partner for many countries included in the trade barometer and stands as Africa’s largest trading partner on a regional scale. About 16% of Africa’s imports come from China, while 20% of its exports are directed to the country. In 2023 this resulted in a trade volume of $282bn.
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